Intrastate commerce is the transportation of property
between two points in the same state via routes wholly
within that state. Although appearing to be academic on
the surface, the distinction between and interstate and
intrastate movement is often highly technical and
difficult to distinguish when a shipment comes to
rest in a warehouse or terminal, changes modes or
undergoes some processing or change in transit.

A common misconception is that if a shipment
comes to rest at some intermediate point, for
storage for instance, it breaks the through
transportation into two segments, one of which may have
been interstate and the other an intrastate local
delivery to final destination or a pier for export.
Coming to rest is NOT the sole
criterion for distinguishing between interstate and
intrastate or foreign commerce.

The U.S. Supreme Court stated in Southern Pacific
Terminal Co. v. I.C.C., 219 U.S. 498 (1911) and Texas
& New Orleans R.R. v. Sabine Tram Co., 227 U.S.
111 (1913) that the fact that a shipment may temporarily
stop, change modes, proceed under a new contract of
lading, or undergo packing or processing incidental to
the transportation does not affect the interstate
character of the shipment. Likewise, interruptions in the
movement affect the interstate or foreign character of
the movement only insofar as they negate intent with
respect to destination.

. . . neither through billing,
uninterrupted movement, continuous possession by the
carrier, nor unbroken bulk, is an essential of a through
interstate shipment. These are common incidents of a
through shipment; and when the intention with which a
shipment was made is in issue, the presence or absence,
of one or all of these incidents may be important
evidence bearing upon that question. But where it is
admitted that the shipment made to the ultimate
destination has at all times been intended, these
incidents are without legal significance as bearing on
the character of the traffic

In sum, it is the shipper's fixed and continuing
intent that governs the character of the movement. The
cases interpreting this principle illustrate a gradual
broadening of the definition of interstate commerce.
While qualifications of this principle are too numerous
to treat adequately herein, the following cases
illustrate the evolution of the case law in this area.

Private barge movement into a state, and then an
inland movement between two points in the same
state by rail, was held to be intrastate
commerce. Pennsylvania R.R. Co. v. Ohio Public
Utilities Commission, 298 U.S. 170 (1936).

A fairly constant demand for product which may be
accurately estimated may be sufficient to
establish a fixed and continuing intent. Standard
Oil Co. v. Federal Trade Commission, supra.

Where product comes to rest for indefinite
periods before reshipping, it is further
processed and is sold from that point, the
subsequent movement is intrastate. Petroleum
Products Within A Single State, 71 M.C.C. 17
(1957).

The bill of lading contracts used on an
intermodal movement may be some evidence of the
nature of the shipment, but such forms are not
controlling. Southern States Cooperative, Inc.
v. B. & O.R.R., 323 I.C.C. 400, 403
(1964).

Shipments of hardware articles from a port to
inland destinations within the same state are
interstate where the shipper intended their
ultimate distribution to its inland stores from
the beginning. The shipper's computerized
inventory control at the storage point was
construed to mean that the ultimate destinations
of the imported articles was determined from the
time the goods were imported. It is not
sufficient to show that some items did not have a
destination designated prior to their arrival at
the port. Iron & Steel Articles,
Wilmington to Points in North Carolina, 323
I.C.C. 740 (1965).

Following a private truck movement interstate, a
further truck movement by for-hire common carrier
within that state was held to be intrastate
commerce. Motor Transportation of Property
Within Single State, 94 M.C.C. 541 (1964), aff'd,
sub. nom. Pennsylvania R.R. Co. v. United States,
242 F.Supp. 890 (E.D. Pa. 1965).

A continuing intent may be established by the
fact that consignees are known in advance and are
bound to accept monthly quotas; the only
uncertainty being the ultimate delivery date. Petroleum
Transit Co., Inc. Ext.Wilmington, N.C.,
102 M.C.C. 380 (1966).

Rail movements of bananas from a California port
to inland points in California were held to be in
foreign commerce because of the clear intent of
the shipper to move the bananas beyond the
coastal port. Long Beach Banana Distributors,
Inc. v. Atchison, Topeka & Santa Fe Ry. Co.,
407 F.2d 1173 (9th Cir. 1969). The I.C.C. had
jurisdiction despite the fact that the inbound
movement was in private water carriage, and some
of the bananas were unsold and loaded into rail
cars to be sold in transit.

Despite a temporary stoppage, motion
picture films distributed within a state were
deemed in interstate commerce when the intent was
that they would be used by the exhibitors and
moved by the carrier as continuously as possible.
Feature Film Service, Inc. v. United States,
349 F.Supp. 191 (S.D. Ind. 1972).

The fact that an interstate movement is subject
to rail transit privileges for possible
out-of-state movement beyond the warehouse does
not alone transform the intrastate move from
plant to warehouse into interstate commerce. Southern
Pacific Transp. Co. v. I.C.C, 565 F.2d 615
(9th Cir. 1977). The fact that most of the goods
eventually were shipped out of state was not
deemed controlling on the issue of a fixed intent
at the original movement.

Since the mid-1980's, there have been a number of
significant cases which substantially broadened the
definition of interstate commerce. These
cases generally involve the flow of goods through a
warehousing or distribution point, where the goods
temporarily come to rest, and are then delivered to final
destinations.

Armstrong World Industries: The 1986
decision of the I.C.C. in Armstrong World
Indust., Inc., Transportation Within Texas, 2
I.C.C. 2d 63, 69 (1986), aff'dsub nom.,
State of Texas v.United States,
866 F.2d 1546 (5th Cir. 1989) involved a petition
for declaratory order by a shipper (E&B
Carpet Mills, a division of Armstrong) to
determine whether certain transportation within
Texas was interstate or intrastate in nature.
Reeves Transportation Company of Georgia joined
in the petition, and a number of trucking
companies and state regulatory commissions became
involved in the case. The reason for the petition
was that the interstate rates were lower than the
local intrastate rates for the segment of the
movement within Texas, and a jurisdictional
dispute had arisen between the Texas Railroad
Commission and Reeves, which was transporting
shipments for E&B at its lower interstate
tariff rates.

Armstrong involved carpet which was
manufactured in Georgia or Tennessee and shipped
to a service center at Arlington, Texas, from
which most of it was reshipped to retail
customers in Texas. The specific issue was:

. . . whether
the movements of non-sidemarked carpet from
Arlington to other Texas points are interstate or
intrastate in naturefn1

fn1 Sidemarking
designates the customer to whom the carpet will
eventually be shipped and is indicated on the
roll of carpet by a tag and also on the freight
documents. 2 I.C.C. 2d at 64

The Commission held the movements to be
interstate in nature, specifically relying on
storage-in-transit provisions in the carriers'
filed tariffs.

The Texas Railroad Commission challenged the
I.C.C.'s decision in Armstrong, appealing
to the Fifth Circuit. The court reviewed the
I.C.C.'s jurisdiction and its reasoning and
affirmed, in State of Texas v. United States,
866 F.2d 1546 (5th Cir. 1989)

Matlack: The 1987 decision of the I.C.C.
in Matlack, Inc.Transportation Within
MissouriPetition for Declaratory Order,
No. MC-C-10999, 1987 Fed. Carr. Cas. (CCH) ¶
37,360 (June 1, 1987) also dealt with the
interstate vs. intrastate issue. In that case,
chemicals moved in bulk from points outside
Missouri by barge, rail and motor carrier to a
St. Louis distribution center. The I.C.C. held
that the subsequent movements from the
distribution center to customers in the state of
Missouri were interstate in nature.

Quaker Oats: In Quaker Oats Co. -
Transp. within TX & CA, 4 I.C.C. 2d 1033
(1987), the I.C.C. again considered whether
certain transportation movements were interstate
or intrastate in nature. Similar to Armstrong,
Quaker Oats shipped product from manufacturing
facilities to warehouses or distribution centers,
from which the goods were distributed, and the
issue was whether the intrastate segment of the
movement was subject to state regulation. The
I.C.C. held that it was not, and that the
transportation was interstate in
nature.

The Commission's decision and declaratory order
in Quaker Oats was also challenged, in
this case, by the California Trucking
Association. California Trucking Association,
et. al. v. I.C.C, 900 F.2d 208 (9th Cir.
1990). The Ninth Circuit rejected arguments that
the I.C.C. lacked jurisdiction to determine
whether the transportation was
intrastate or interstate,
and that its decision was arbitrary or
capricious, and denied the petitions for review.

Teamsters: The interstate vs. intrastate
issue was also the subject of the Ninth Circuit's
decision in Int'l Brotherhood of Teamsters v.
I.C.C., 921 F.2d 904 (9th Cir. 1990). This
involved an appeal of an I.C.C. declaratory order
which determined that the distribution of paper
products from a distribution center in Woodland,
California was interstate in
character. The court in Teamsters found
that the I.C.C. examined all the relevant
circumstances and concluded that JRC at the time
of its shipment to the Woodland Center in
California intended the shipped goods to move in
interstate commerce continuously until they
reached JRC's California customers.

There was one additional issue not present in the
earlier cases: whether goods shipped from a point
in one state to a point in the same state may
remain in interstate commerce even where an
exempt movement of the goods precedes the
single-state movement. In the particular
situation, some of the inbound movements to the
California distribution center came by rail
boxcar or trailer-on-flatcar shipments which had
been exempted from economic regulation by the
I.C.C. pursuant to 49 U.S.C. § 10505 (Appendix
10). The court held the single-state
segment to be interstate, notwithstanding the
prior exempt movement.

I.C.C. Policy StatementMC-207: The
I.C.C.'s Policy StatementMotor Carrier
Interstate TransportationFrom Out-of-State
Through Warehouses to Points in Same State, Ex
Parte MC-207, 8 I.C.C. 2d 470 (1992) was an
effort by the Commission to issue guidelines and
criteria for determining whether certain traffic
is interstate or intrastate. It basically
summarizes the results of the I.C.C.'s decisions
in cases such as Armstrong and Quaker
Oats.

Merchants: Merchants Fast Motor Lines,
Inc. v. I.C.C, 5 F.3d 911 (5th Cir. 1993) was
essentially a continuation of the jurisdictional
dispute between the Railroad Commission of Texas
and the I.C.C. which was involved in Armstrong.
The case dealt with shipments of merchandise
moving by for-hire carriage from points outside
Texas to warehouse or distribution centers
located in Texas. The shippers temporarily stored
the merchandise in Texas warehouses and then
shipped the merchandise to Texas destinations by
carriers with interstate authority. The I.C.C.
concluded that the Texas leg of the
transportation was interstate, because it was the
shipper's intent to move the goods continuously
in interstate commerce.

For the purposes of this text, however, it is
sufficient to note that if the determination is
made that the claim arose on an interstate
or foreign commerce movement, the carrier's
liability will be governed by the appropriate
section of the Interstate Commerce Act. If
it is an intrastate movement, it will be governed
by state law.

Question: On pool-truck distribution loads,
where the consignees are known and each carton is
stenciled with their respective names, addresses and
codes, does the issuance of separate bills of lading from
the distribution point of the ultimate destination in the
same state change the distribution movement into an
intrastate move?

Answer: No. The intent of the shipper at the
time of movement was that each carton move directly to
the intended consignees. Execution of multiple bills of
lading does not change that intent.